During the seminar, the participants discussed the minimum standard and optional provisions of the MLI chosen by Ukraine
On 24 October, the seminar "Multilateral Convention (MLI): What Business should Get Prepared for?" was held in KPMG’s office. Oleksandr Boboshko, Director and Anastasia Mosunova, Manager, KPMG in Ukraine, discussed with the participants what does MLI mean, how it will be applied, and what impact could MLI have on taxation of international business structures.
For your reference, on 23 July 2018, Ukraine signed the OECD Multilateral Convention to Implement Tax Treaty Related Measures to Prevent BEPS, which would significantly change the approaches to international taxation of ownership / financing / trading structures, and would tighten the tax authorities’ control in this area.
During the seminar, the participants discussed the minimum standard and optional provisions of the MLI chosen by Ukraine. In particular, the speakers talked about application of Principal Purpose Test to payment of passive income (dividends, interest and royalty) to and by group companies located in different jurisdictions.
The participants also analyzed the impact of MLI provisions on taxation of group of companies, as well as on enjoying benefits of the Double Tax Treaties.
Anastasia Mosunova advised the participants to analyze the impact of MLI on the current business structures.
At the end of the seminar, the speakers shared with participants their recommendations on restructuring of businesses to comply with requirements provided for by MLI (in particular, to enhance business substance in foreign jurisdictions, to prepare internal documents substantiating that there are other purposes of arrangement or international business structure, apart for obtaining benefits under the Double Tax Treaties etc.).
“By joining the MLI, Ukraine made an important step towards harmonizing the legal framework with current practices focused on enhancing transparency of foreign economic relations. Certain structures that were traditionally used by Ukrainian businesses for tax planning will become less attractive, and would, probably, not work any longer. Cost-efficient tax structures would most likely need to be revised and improved from the legal perspective to comply with the “substance” requirements. Therefore, today during the seminar we emphasized that business should get prepared for inevitable transformations as soon as practicably possible",– Alexander Boboshko commented.